Handy Hardware Purchases 1200 Metallic Hooks from Heavy Metals for $1.25

question 23

Multiple Choice

Handy Hardware purchases 1200 metallic hooks from Heavy Metals for $1.25 each.Handy promises to pay the money in three months.Heavy Metals wants the money now,as well as keeping Handy as a customer.Heavy Metals (as drawer) drafts an instrument ordering Handy (as drawee) to pay $1500 to First Bank (the payee) .This instrument is:

• A)a check.
• B)a promissory note.
• C)a trade acceptance.
• D)a payable on demand note.

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Definitions:

Accounts Receivable

Company receivables originating from goods or services offered to customers who haven't yet completed payment.

Accounts Payable

Funds that a company is required to pay to its suppliers for products or services received but for which payment has not yet been made.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, by comparing its current assets to its current liabilities.

Net Working Capital Turnover

A measure of how effectively a company is using its working capital (current assets minus current liabilities) to generate sales.